American Airlines CEO, Gerard Arpey, met (16-Dec-2009) with Japan's Minister of Land, Infrastructure, Transport and Tourism to reinforce the airline's commitment to Japan Airlines, with the following highlights from Mr Arpey's News Conference in Tokyo:

Overview of offer: "We have offered JAL a total value proposition that is superior in every way to the alternative. It offers far more commercial and financial benefits, far less risk and the best chance for JAL to achieve long-term success";

Exclusive Partner concept/Network synergies: "Our networks complement each other. As a result, we each have a strong incentive to push as much traffic as possible onto the other's network. The competing offer would put JAL at risk of losing customers at a time when it can least afford it. Yet, it is also clear that a withered, marginalized JAL would significantly benefit SkyTeam's immunized hub in Seoul. That is not a risk that JAL, nor the government of Japan, should take.

Anti-trust immunity: "A JAL-American Airlines combination can readily obtain antitrust immunity from the US Department of Transportation, which will be worth hundreds of millions of dollars to JAL in the future. We are confident that this will not be an option for JAL in any other alliance";

Increased Investment: American may increase a proposed capital investment in JAL "depending on the circumstances” (Dow Jones/New York Times/Associated Press/Kyodo, 16-Dec-2009);

Delta-JAL: American would "object loudly and stridently" if Delta was granted immunity with JAL, stating the combination “would make a mockery of open skies” (Dow Jones/New York Times/Associated Press/Kyodo, 16-Dec-2009).

American Airlines: “Conceivably there could be a bigger investment made by the oneworld, TPG and American as a group, depending on the circumstances that have to be worked out with the government and with JAL...[the bid] will enhance JAL’s opportunity for long-term success, and it will inject a large amount of much-needed capital in the short term,” Source: New York Times/Kyodo, 16-Dec-2009.

Separately, Delta Air Lines CEO, Richard Anderson, indicated that it has a financial advantage in investing in JAL, with cash in hand worth approximately USD5.3 billion at the end of 2009 (Kyodo, 16-Dec-2009). Delta earlier offered JAL a USD1.02 billion financial package with SkyTeam alliance members, including a USD500 million investment.

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At a top level the JV does seem to raise concern: combined, Qantas and American would hold 59% of the US-Australia market. Yet almost all of that – 53% – is from Qantas; American adds only 6ppt.

DOT rejects the notion that such larger market share can possibly be in the interest of consumers. Yet it appears to overlook the benefit American might bring in exchange for incremental market share gains. Nor is it clear if this combination is more anti-competitive than some JVs where two airlines, each with a small- or medium-sized position, combine and become multiples larger. Qantas' 53% market share was earned through quality and smart loyalty programme development while competitors lagged.

Qantas will continue growth in North America, its most successful international market, but American Airlines' growth is uncertain and it may re-evaluate a supposedly planned Los Angeles-Melbourne 787 service.

For years United Airlines has operated at a competitive disadvantage to its large US network peers. The challenges that United never seemed to overcome were largely self-inflicted, and ranged from widespread employee discontent to consistent revenue shortfalls.

Now United finally appears to be charting a course to level the competitive playing field with its large global US network competitors, to close the long-standing revenue gap it has held with its rivals. The elements of United’s plan to shore up revenues include bolstering connections at its hubs, improved revenue management, and product segmentation that entails a new basic economy fare structure whose restrictions are more stringent than those of its peers.

United’s revenue transformation will not occur overnight, but for the first time since its 2010 merger with Continental the company seems laser-focused on shrinking the competitive challenges that have hindered its performance. It projects billions in improvement – to pre-tax profits by 2020 – as a result of its doubling down on efforts to shore up revenue. Obviously the measure of United’s success lies in its execution and its ability to navigate competitive responses to its revenue-generating strategies.

This is part one of a two part series examining United’s strategies to compete more effectively with its peers on revenue and costs.